RBI's Overseeing Committee approves 1st ever S4A scheme to HCC Ltd

The Overseeing Committee of the Reserve Bank of India (RBI) has given its approval for the Scheme for Sustainable Structuring of Stressed Assets (S4A) for Hindustan Construction Company, the latter said in a notification to the BSE on Sunday.

The move has made HCC the first company to get an approval by the RBI's Overseeing Committee, it said.

HCC has a total funded debt of Rs 5,107 crore, which has been considered under the S4A scheme. The debt will be divided into two -- sustainable and unsustainable debt.

The Part A or the sustainable debt, according to the company, will be of Rs 2,681 or 52.50% of the total debt.

The Part B or the unsustainable debt, will be Rs 2,426 crore or 47.50% of the total debt.

According to the notification, "the lenders will subscribe to 24.44% fresh equity (Rs 1,008 crore assuming Rs 40 rate) which will bring down the promoter holding from 36.07% to 27.44% The share price will be determined as per Sebi guidelines and accordingly, the debt will go down to the extent of the conversaion amount.

"The balance portion of Part B, will be converted into Optionally Convertible Debentures for ten years with coupon @0.01%, 11.5% YTM," it said.

Commenting on the development, HCC Group CEO Praveen Sood, said, "The S4A scheme will help the company bridge the gap of 'Cashflow Timing Mismatch' between claims realisation (including its interest) and debt servicing.

"The move comes at an opportune time as HCC is already on recovery path with order book growth of over 30% in last one year. We feel that it's a positive move for HCC and will bring sustained long term solution for the company."

HCC's shares will be in focus today on the bourses. On Friday, the company's shares had closed at Rs 34.45. In pre-open hours,